Despite being cautiously optimistic about company earnings this month, some investors and economists are preparing for tough times ahead amid sticky inflation risks and continued consumer weakness, while markets wait for a rate cut.

Over the past few weeks, there has been a deluge of earnings results and trading updates from ASX-listed companies, which AMP chief economist Dr Shane Oliver said showed “fractionally” better-than-normal numbers, in line with other major economies.

Economists Stephen Miller (left), Jun Bei Liu and Shane Oliver say there could be more tough times to come.Credit: Andrew Quilty, Renee Nowytarger, Dominic Lorrimer

“Australian companies performed a little better than the average over the last 20 years,” he said. “They’re resilient but not shooting the lights out.”

Oliver said about 42 per cent of companies had so far surprised to the upside compared to 38 per cent which surprised to the downside, but that the average surprise was negative, with more weakness among larger companies.

That’s partly because of worse results from big energy companies, Oliver said, following a substantial fall in commodity prices. Energy stocks benefited from very high prices for coal, oil and gas in 2022 and 2023 as a result of the war in Ukraine, but those prices have since fallen.

Tribeca Investment Partners portfolio manager Jun Bei Liu said this reporting season had been better than expected, with most analysts positively surprised.

“Companies talked about slowing revenue momentum, but it was better than analysts expected, and margins and forward-looking guidance were also better than expected,” she said. “There are signs confidence had picked up among investors with mergers and acquisitions picking up in the last few weeks. Every second day there has seemed to be a takeover offer.”

However, Liu said she was surprised at how quickly momentum in consumer staples including supermarkets had unwound, and noted companies which were COVID beneficiaries, including Domino’s Pizza and Collins Foods, had earnings slow.